| B/D |
Barrels pre day - a term used to quantify flow rates. |
| Backwardation |
A market situation in which futures prices are progressively lower in the distant months. An inverted market. |
| Barrel (bbl) |
A unit of volume measurement (unique to the petroleum industry) equal to 42 U.S. gallons. A Drum equals 55 U.S. gallons whereas a Pail equals 30 U.S. gallons. |
| Basis |
The differential that exists at any time between the futures price for a given commodity and the comparable cash or spot price for the commodity. |
| Basis Grade |
The grade of a commodity used as the standard or par grade of a futures contract. |
| Basis Quote |
Offer or sale of a cash commodity in terms of the differentials above or below a futures prince (e.g. 10 cents over May WTI). |
| Basis Risk |
The degree of price exposure associated with an unexpected widening or narrowing of basis between the time a hedge position is established and the time that it is lifted. |
| Bcf |
Billion cubic feet. |
| Bear |
One who anticipates a price decline (n.). A declining market (adj.). A trader with a short position (n.). |
| Bear Spread |
In futures, a simultaneous purchase of a back month and sale of a nearby month in anticipation of a widening of the differential, in anticipation of a weakness in the front months relative to the back months. In options the simultaneous purchase and sale of options of the same class and expiration date but different strike prices. The lower priced option is sold and the higher priced option is bought, (also called a bear vertical spread), in anticipation of a declining market. |
| Bid |
An auction term meaning “a motion to buy” at a specified price. |
| Blending Plant |
A facility that is capable of producing finished gasoline through mechanical blending of oxygenates with motor gasoline. This facility has no refining capabilities. |
| Book Transfer |
The transfer of title of cash commodity via a bookkeeping entry with no physical movement of the commodity. |
| Booking the Basis |
A forward pricing sales arrangement in which the cash price is determined either by the buyer or seller within a specified time frame. At the time the final price is fixed, a previously agreed upon basis is applied to the current futures price. |
| Box or Box Spread |
An option spread position in which the holder has established a long call and short put at one strike price and short call and a long put at another strike price, all of which are in the same contract month in the same commodity. A riskless trade also called a Box Transaction which is usually used by a trader to lock in a profit. |
| Branded Fuels |
Includes a set of products such as gasoline, diesel fuel, etc., owned by a refiner and usually affiliated with major oil companies. |
| Break |
(1.) A sudden sharp decline in prices. (2.) An unmatched trade also known as a DK (don’t know) or out trade. The break clerk, whose job it is to tell traders/brokers (first thing in the morning) that there is a “break” is the futures equivalent of the Grim Reaper (and just about as popular). |
| Brent |
Brent is the European equivalent of U.S. West Texas Intermediate, serving as a benchmark crude oil. It is the standard crude oil for the London futures market and the crude oil is from a group of North Sea fields. |
| Broker |
One who executes transactions for other parties in exchange for a fee (commission). In futures, the term may refer to a floor broker (on the trading floor), an AE/IB, (off the floor) or generically to any person trading futures on the floor of an exchange. |
| BS & W |
Bottom sediment and water; waste material usually found in both crude and residual oils. |
| BTU |
British Thermal Unit (usually written as Btu) the amount of heat required to raise the temperature of one pound of water one degree Fahrenheit. One Btu = 252 calories. |
| Bulge |
A rapid advance in prices. A spike is a sharp bulge upon which traders who are short get impaled. |
| Bulk Terminal |
A storage facility which has the capacity to store 50,000 barrels or more. The terminal is usually situated near a waterway or pipeline. |
| Bull |
One who anticipates rising prices (n.). A rising market (adj.). A trader with a long position (n.). |
| Bull Spread |
In futures, the simultaneous purchase of a nearby month and sale of a deferred month in expectation of a narrowing of the differential between the months, in anticipation of a strengthening of front months relative to the back months. In options the simultaneous purchase and sale of options of the same class and expiration date but different strike prices; the lower price options are bought and the higher price options are sold, in anticipation of a rising market. Also called a bull vertical spread. |
| Bunker Fuel Oil |
A type of residual fuel oil primarily used in ship’s boilers. A low grade heavy fuel oil usually high in sulphur content. The Term dates back to the days of coal fired boilers when shipboard coal storage areas were called “bunkers”. |
| Butterfly Spread |
In futures, a spread involving three legs in three months. One goes long the “wings” and short the “body” or short the wings and long the body; the position in the body being equal in quantity to the total of the wings. In options the contracts have the same expiration date differ in strike prices. |
